UNITED STATES v. P&G

UNITED STATES of America, Plaintiff,
v.
PROCTER & GAMBLE COMPANY et al., Defendants

The opinion of the court was delivered by: HARTSHORNE

When this case was before our highest Court previously, the Court, after alluding to the claim that 'the prosecution was using criminal procedures to elicit evidence in a civil case,' said:

'* * * If the prosecution were using that device, it would be flouting the policy of the law * * * For all we know, the trails that looked fresh at the start faded along the way. What seemed at the beginning to be a case with a criminal cast apparently took on a different character as the events and transactions were disclosed.' United States v. Procter & Gamble Co., 1957, 356 U.S. 677, 683-684, 78 S. Ct. 983, 987, 2 L. Ed. 2d 1077.

Thus the Court alludes to the lack of proof before it at that time, as to whether this case did, or did not, come within that condemned category of those where the Department of Justice was using the Grand Jury 'to elicit evidence in a civil case.' The Court concluded that if that misuse were the case, 'the criminal procedure is subverted' and "good cause' (exists) for wholesale discovery and production of a grand jury transcript', taken under such conditions, to the defendants in order to nullify the advantage thus illegally obtained by this unlawful use of the Grand Jury by the prosecution.

Since the defendants were naturally particularly desirous of seeing the testimony of the many witnesses before the Grand July herein, which sat for well over a year, they proceeded, after the above decision, in turn by interrogatories, by demand for the production of Government documents under F.R.Civ.P. 34, 28 U.S.C.A., and by deposition, to seek to prove that there had been such a misuse of the Grand Jury entitling them to see this Grand Jury evidence. The answers to such interrogatories revealed the fact that on November 14, 1952, toward the close of the Grand Jury hearings, Attorney General McGranery, who had succeeded Attorney General McGrath, approved the recommendation of the then head of the Antitrust Division, Mr. Newell Clapp, that the Grand Jury not be asked to find an indictment, but that a bill in equity be filed for 'divestitures or dissolutions imposed in civil proceedings' upon the basis of the evidence produced before the Grand Jury. Upon such proof, this Court then ordered that the transcript of the evidence before the Grand Jury, taken after the approval of the above mentioned recommendation by the Attorney General, be made available to the defendants.
*fn1"
See United States v. Procter & Gamble Co., D.C.1959, 175 F.Supp. 198.

On the theory that this action by Attorney General McGranery might in fact have been the attitude of the Department of Justice from the very beginning, the defendants, then demanded the production of extremely voluminous intraoffice documents of the Department of Justice bearing upon this case. This at once raised the question of governmental privilege. See opinion, United States v. Procter & Gamble Co., D.C., 25 F.R.D. 485. The parties as well took the depositions in that regard of former Attorneys General McGrath and McGranery, of Mr. Browning, the then Executive Assistant to Mr. McGrath, and now the Clerk of the United States Supreme Court, of Mr. Morison, the head of the Antitrust Division under Attorney General McGrath, of Mr. Clapp, the head of the Antitrust Division under Attorney General McGranery, of Mr. Kramer, the former head of the Litigation Section of the Antitrust Division and of Mr. Walker Smith, in actual charge of the Grand Jury when it sat at Newark.

The resultant question now before this Court thus is, whether or not, from the very beginning, the prosecution had been using criminal procedures to elicit evidence in a civil case.

The crux here is, what did the Department of Justice intend, seek, and therefore do, when it called and actually used the Grand Jury? There are in general three possible situations as to the intention and desire of the Department of Justice during that period. (1) Did it intend and seek that an indictment result, because it believed from its previous investigation that that was the appropriate remedy? (2) Did it then have a completely open mind as to what the appropriate remedy should be, civil, criminal, or both? (3) Did it intend and seek a civil remedy solely because its previous investigation indicated that only a civil remedy would be appropriate and effective? Though, of course, in this last situation, if unexpected evidence was produced, and it became clear that a criminal remedy was not only possible but would be appropriate and effective, the Department then naturally, as former Attorney General McGrath in fact testifies, always had the right to pursue that criminal line.

Clearly, if the first situation occurred and an indictment was intended from the beginning, there would be no misuse of the Grand Jury. This the record, as set forth below, clearly shows did not occur in this case.

Clearly, if the second situation occurred, with an indictment and a civil remedy, either or both of them intended and sought by the Government, depending on the evidence produced, there would be no misuse of the Grand Jury. This the record, set forth below, clearly shows did not occur here.

But, if the third situation occurred, and the sole intent and desire, not to say expectation, of the Government was that a civil remedy alone should eventuate, with evidence calling for an indictment as merely an unexpected bare possibility, which indictment did not then even appear appropriate, according to the then existing practice of the Department of Justice, obviously a misuse of the Grand Jury did occur, at least until that unexpected bare possibility actually eventuated. Obviously, under such circumstances, with such eventuality lacking, the Grand Jury was then being used 'for the purpose of gaining evidence * * * to file a civil suit,' to quote the language of Kramer, the then Chief of the Litigation Section of the Antitrust Division, in his memorandum to Morison, the then head of the Antitrust Division of the Department of Justice, written shortly before the Grand Jury was authorized in this case. Yet this last is exactly the situation that existed in the case at bar, as the record hereinafter set forth will show.

Before turning to the facts, it would be desirable to clarify the effect of the ever present, though unexpected, bare legal possibility of the production of evidence before the Grand Jury, which not merely would support an indictment, but make an indictment practically both appropriate and desirable from the standpoint of the Government. Here the well established principle must be borne in mind that equity has no general jurisdiction over cases brought for the violation of the Sherman Act, but only has jurisdiction based on a criminal violation of the Act in order to prevent the recurrence of such a violation in the future. See United States v. Procter & Gamble Co., D.C.1959, 180 F.Supp. 195, 204; United States v. Swift, D.C.N.D.Ill.1911, 188 F. 92, 96; Standard Sanitary Mfg. Co. v. United States, 1912, 226 U.S. 20, 52, 33 S. Ct. 9, 57 L. Ed. 107; In re Petroleum Industry Investigation, D.C.E.D.Va.1957, 152 F.Supp. 646. Thus the technical, if not practical, basis for an indictment must exist in every case where a civil remedy lies. If the existence of such an unexpected bare possibility suffices to constitute the use of the Grand Jury for criminal purposes, in addition to its use to obtain evidence on which to base a civil remedy, which last is definitely sought, it would then be impossible for any such misuse of the Grand Jury ever to occur. In other words, our highest Court, if such were the case, would then have spent a substantial portion of its opinion in this case in the discussion of a legal impossibility -- a rather surprising conclusion.

Furthermore, as stated above, the crucial question is what the Department of Justice was actually intending and seeking to do, when it called and actually used the Grand Jury. This obviously determines the use, or misuse, of the Grand Jury in fact, not the ever present existence of an unexpected bare legal possibility, which is not being sought by the Department and which does not in the slightest affect the action of the Department of Justice in using the Grand Jury, and which is thus immaterial so far as the use or misuse of the Grand Jury is concerned.

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